PENSION BOMB: Local school budgets crippled by problem

Note to Readers: This is the fifth part of a series on the pension crisis facing Pennsylvanians. The stories are part of a project being done by The Pottstown Mercury (www.pottsmerc.com), a sister paper of the Daily Local News.

By Evan Brandt

ebrandt@pottsmerc.com

If you think Pennsylvania’s pension crisis is just a fight in Harrisburg between teachers unions and legislators, take a look at your child’s class size.

The yawning pension deficit that is currently hobbling Pennsylvania’s budget is having a similar trickle-down effect on local school budgets and is helping drive higher property taxes; teacher vacancies; higher class sizes and reduced academic programming.

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As the school boards in Pottsgrove, Daniel Boone, Pottstown and Phoenixville school districts struggle to make ends meet, the single most common cause driving higher spending is the sky-rocketing cost of paying for Pennsylvania’s broken pension system.

“It is the number one problem in Pennsylvania and its not easily fixed,” said Steve Robinson, a spokesman for the Pennsylvania School Boards Association.

In order to fill the gap — although not adequately — school districts are facing an escalating price tag.

This year, they must pay about 21 percent of their total payroll into the pension fund.

Next year it will be higher and higher still the year after that.

Tim Anspach, business manager for the Spring-Ford Area School District, said his district’s pension bill with jump by about $1.5 million each year for the next three years.

By the 2017/2018 school year, the overall pension bill in Spring-Ford will be nearly $10 million, said Anspach.

“We’ve got a pretty good commercial tax base, so we’re not quite as bad off as some districts,” he said.

“Look at a district like Daniel Boone, that doesn’t have much commercial development and is mostly a bedroom community, they can only raise taxes so much. It’s just not sustainable,” Anspach said. “Something’s got to give.”

Some things already have.

Anspach said because a school district’s pension payments are based on its payroll, many districts — his included — are doing everything they can do reduce that payroll, and thus their pension payment.

It was one reason the district “contracted out” its custodial services and next year will be using a contracted service to provide substitute teachers, as Pottstown has already done — all ways to reduce the district’s payroll.

Another way is to let teacher vacancies remain unfilled, which leads to larger class sizes, said Jay Himes, executive director of the Pennsylvania Association of School Business Officials.

“What everyone is doing is shedding payroll as fast as they can,” Himes said.

Pottstown’s $55.9 million preliminary budget calls for eliminating another 11 positions as well as increase property taxes by 2.9 percent.

They’re not alone.

It’s happening all over the Commonwealth.

Together with the Pennsylvania Association of School Administrators, Himes’ organization produces an annual survey of school district budgets.

This year’s survey was released Thursday and its figures — dire as they are — do not even reflect the darker state budget picture which has emerged in recent weeks as revenue projects continue to fall ever shorter, Himes said.

The survey shows that “nearly 60 percent of school districts have furloughed staff since 2010-11, with more than 40 percent of these furloughs affecting classroom teachers,” according to the release announcing the survey’s release.

“With about one in seven districts planning furloughs of classroom teachers for next year, fewer teachers continues to mean increasing class sizes, which has occurred in 64 percent of districts since 2010-11,” the release stated.

Also, “about 77 percent of districts are going to raise property taxes and in the last few years, it had been 60 to 65 percent, so that’s a significant increase,” Himes told The Mercury.

Even that may not be enough.

Because Harrisburg, in addition to creating the pension shortfall that is now stealing money from area classrooms, also limits a school district’s ability to raise revenue locally, imposing an individually calculated “Act 1 index” that caps any tax hike without voter approval.

No expert The Mercury spoke with for this series believed a voter referendum to raise taxes beyond the index to pay pension costs would pass muster with voters in any of Pennsylvania’s 500 school districts.

“It’s not a winning argument,” Himes said simply.

“So the increase in pension rates is raising costs on the one hand and the Act 1 index is limiting their ability to raise revenue,” said Himes.

And the pension rate hikes are so extreme “that in a lot of districts, the entire tax increase is being consumed by the pensions,” said Himes.

So property tax hikes are not lowering class size, adding new equipment or adding new programs, they are merely trying to fill an ever-widening hole in the pension budget.

Rather than add programs, most districts are cutting them.

Next year, according to the PASA/PASBO survey, school districts anticipate eliminating or reducing 370 academic programs, which is in addition to 783 academic program reductions that have occurred since 2010-11.

The reductions, according to the survey, include advanced placement courses, business education, foreign languages, music, kindergarten, physical education and special education.

Fully one-third of the districts that responded to the survey anticipate reducing, or eliminating, or charging a user fee for extra-curricular activities and athletics.

“I don’t think there’s a truly painless way to address this,” said Robinson.

The fact that 2014 is an election year doesn’t make the path to a solution any clearer.

“It’s very difficult thing to tackle right now,” said Robinson, “and politics does tend to make things more complicated.”

“If not addressed, the pension crisis will have a crippling effect on the state’s economy and a devastating impact on local school district budgets. The current system is unsustainable, leaving taxpayers to feel the brunt of staggering increases unless a workable, long-term solution is enacted,” is how the PSBA views the issue.